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Previous: MANUFACTURED HOME COMMUNITIES INC, 8-K, 1998-06-18 |
Next: MANAGED HIGH INCOME PORTFOLIO INC, POS 8C, 1998-06-18 |
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 18, 1998
Morgan Stanley Dean Witter & Co.
--------------------------------------
(Exact name of Registrant as specified
in its charter)
Delaware 1-11758 36-3145972
-------------------------------------------------------------------------
(state or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
1585 Broadway, New York, New York 10036
------------------------------------------------
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code: (212) 761-4000
--------------
-------------------------------------------------------------------------
(Former address, if changed since last report.)
<PAGE>
Item 5. Other Events
- ---------------------
On June 18, 1998, Morgan Stanley Dean Witter & Co. (the "Registrant")
released financial information with respect to the quarter ended May 31, 1998. A
copy of the press release containing such financial information is annexed as
Exhibit 99.1 to this Report and by this reference incorporated herein and made a
part hereof.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
- --------------------------------------------------------------------------
99.1 Press release of the Registrant dated June 18, 1998
containing financial information for the second quarter
ended May 31, 1998.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereto duly authorized.
MORGAN STANLEY DEAN WITTER & CO.
--------------------------------
(Registrant)
By: /s/ Ronald T. Carman
--------------------------------
Ronald T. Carman
Assistant Secretary
Dated: June 18, 1998
<PAGE>
MORGAN STANLEY DEAN WITTER & CO.
Financial Summary
(unaudited, dollars in millions, except per share data)
<TABLE>
<CAPTION>
Quarter Ended Percentage Change From:
------------------------------------------ ---------------------------
May 31, 1998 May 31, 1997 Feb 28, 1998 May 31, 1997 Feb 28, 1998
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net revenues
Securities $ 3,074 $ 2,145 $ 2,705 43% 14%
Asset Management 730 638 636 14% 15%
Credit and Transaction Services 795 737 694 8% 15%
------------ ------------ ------------
Consolidated net revenues $ 4,599 $ 3,520 $ 4,035 31% 14%
============ ============ ============
Net income
Securities $ 530 $ 312 $ 472 70% 12%
Asset Management 157 149 120 5% 31%
Credit and Transaction Services 167 129 99 29% 69%
------------ ------------ ------------
Consolidated net income $ 854 $ 590 $ 691 45% 24%
============ ============ ============
Preferred stock dividend requirements 14 18 15 (22%) (7%)
------------ ------------ ------------
Earnings applicable to common shares $ 840 $ 572 $ 676 47% 24%
============ ============ ============
Merger charges 0 63 0 * --
------------ ------------ ------------
Earnings applicable to common shares
after merger charges $ 840 $ 509 $ 676 65% 24%
============ ============ ============
Earnings per common share
Basic $ 1.44 $ 0.88 $ 1.15 64% 25%
Diluted $ 1.37 $ 0.84 $ 1.10 63% 25%
Diluted, excluding merger charges $ 1.37 $ 0.94 $ 1.10 46% 25%
Diluted, excluding acquisition
charges(1) $ 1.40 $ 0.97 $ 1.12 44% 25%
Average common shares outstanding
Basic 581,326,618 577,985,371 586,751,340
Diluted 612,625,354 610,430,898 616,377,562
Period end common shares outstanding 587,672,561 586,342,798 605,005,581
Return on common equity 25.0% 18.3% 20.1%
Return on common equity excluding
acquisition charges (1) 25.5% 21.2% 20.6%
<CAPTION>
Six Months Ended Percentage
---------------------------
May 31, 1998 May 31, 1997 Change
------------ ------------ ----------
Net revenues
Securities $ 5,779 $ 4,364 32%
Asset Management 1,366 1,147 19%
Credit and Transaction Services 1,489 1,483 --
------------ ------------
Consolidated net revenues $ 8,634 $ 6,994 23%
============ ============
Net income
Securities $ 1,002 $ 670 50%
Asset Management 277 236 17%
Credit and Transaction Services 266 255 4%
------------ ------------
Consolidated net income $ 1,545 $ 1,161 33%
============ ============
Preferred stock dividend requirements 29 37 (22%)
----------- ------------
Earnings applicable to common shares $ 1,516 $ 1,124 35%
============ ============
Merger charges 0 63 *
----------- ------------
Earnings applicable to common shares
after merger charges $ 1,516 $ 1,061 43%
============ ============
Earnings per common share
Basic $ 2.60 $ 1.84 41%
Diluted $ 2.47 $ 1.75 41%
Diluted, excluding merger charges $ 2.47 $ 1.85 34%
Diluted, excluding acquisition
charges(1) $ 2.53 $ 1.92 32%
Average common shares outstanding
Basic 583,502,306 575,301,529
Diluted 614,179,415 607,771,801
Period end common shares outstanding 587,672,561 586,342,798
Return on common equity 22.6% 19.5%
Return on common equity excluding
acquisition charges (1) 23.1% 21.4%
</TABLE>
_____________________________________
(1) Excludes the effects of expenses associated with the merger of Dean Witter,
Discover & Co. and Morgan Stanley Group Inc. and amortization of goodwill.
<PAGE>
MORGAN STANLEY DEAN WITTER & CO.
Consolidated Income Statement Information
(unaudited, dollars in millions, except per share data)
<TABLE>
<CAPTION>
Quarter Ended Percentage Change From:
------------------------------------------ ----------------------------
May 31, 1998 May 31, 1997 Feb 28, 1998 May 31, 1997 Feb 28, 1998
------------ ------------ ------------- ------------ -------------
<S> <C> <C> <C>
Investment banking $ 988 $ 581 $ 800 70% 24%
Principal transactions:
Trading 1,091 722 903 51% 21%
Investments 101 136 72 (26%) 40%
Commissions 611 484 547 26% 12%
Fees:
Asset management, distribution
and administration 741 610 676 21% 10%
Merchant and cardmember 404 424 428 (5%) (6%)
Servicing 232 186 171 25% 36%
Interest and dividends 4,213 3,197 3,933 32% 7%
Other 47 36 55 31% (15%)
------------ ------------ -----------
Total revenues $ 8,428 $ 6,376 $ 7,585 32% 11%
Interest expense 3,554 2,478 3,145 43% 13%
Provision for consumer loan losses 275 378 405 (27%) (32%)
------------ ------------ -----------
Net revenues $ 4,599 $ 3,520 $ 4,035 31% 14%
------------ ------------ -----------
Compensation and benefits 2,017 1,505 1,788 34% 13%
Occupancy and equipment 143 127 140 13% 2%
Brokerage, clearing and exchange fees 132 113 119 17% 11%
Info processing and communications 275 267 267 3% 3%
Marketing and business development 286 274 294 4% (3%)
Professional services 156 99 128 58% 22%
Other 190 178 166 7% 14%
------------ ------------ -----------
Total non-interest expenses $ 3,199 $ 2,563 $ 2,902 25% 10%
------------ ------------ -----------
Income before income taxes 1,400 957 1,133 46% 24%
Income tax expense 546 367 442 49% 24%
------------ ------------ -----------
Net income $ 854 $ 590 $ 691 45% 24%
============ ============ ===========
Preferred stock dividend requirements 14 18 15 (22%) (7%)
------------ ------------ -----------
Earnings applicable to common shares $ 840 $ 572 $ 676 47% 24%
============ ============ ===========
Merger charges 0 63 0 * -
------------ ------------ -----------
Earnings applicable to common shares
after merger charges 840 509 676 65% 24%
============ ============ ===========
Earnings per common share:
Basic $ 1.44 $ 0.88 $ 1.15 64% 25%
Diluted $ 1.37 $ 0.84 $ 1.10 63% 25%
Diluted, excluding merger charges $ 1.37 $ 0.94 $ 1.10 46% 25%
Diluted, excluding acquisition
charges(1) $ 1.40 $ 0.97 $ 1.12 44% 25%
Average common shares outstanding:
Basic 581,326,618 577,985,371 586,751,340
Diluted 612,625,354 610,430,898 616,377,562
Return on common equity 25.0% 18.3% 20.1%
Return on common equity excluding
acquisition charges (1) 25.5% 21.2% 20.6%
<CAPTION>
Six Months Ended Percentage
-------------------------------------
May 31, 1998 May 31, 1997 Change
------------------ ----------------- --------------
<S> <C> <C> <C>
Investment banking $ 1,788 $ 1,103 62%
Principal transactions:
Trading 1,994 1,591 25%
Investments 173 192 (10%)
Commissions 1,158 974 19%
Fees:
Asset management, distribution
and administration 1,417 1,197 18%
Merchant and cardmember 832 860 (3%)
Servicing 403 386 4%
Interest and dividends 8,146 6,566 24%
Other 102 67 52%
--------------- ---------------
Total revenues $ 16,013 $ 12,936 24%
Interest expense 6,699 5,187 29%
Provision for consumer loan losses 680 755 (10%)
--------------- ---------------
Net revenues $ 8,634 $ 6,994 23%
--------------- ---------------
Compensation and benefits 3,805 2,995 27%
Occupancy and equipment 283 255 11%
Brokerage, clearing and exchange fees 251 208 21%
Info processing and communications 542 537 1%
Marketing and business development 580 562 3%
Professional services 284 192 48%
Other 356 360 (1%)
--------------- ---------------
Total non-interest expenses $ 6,101 $ 5,109 19%
--------------- ---------------
Income before income taxes 2,533 1,885 34%
Income tax expense 988 724 36%
--------------- ---------------
Net income $ 1,545 $ 1,161 33%
=============== ---------------
Preferred stock dividend requirements 29 37 (22%)
--------------- ---------------
Earnings applicable to common shares $ 1,516 $ 1,124 35%
=============== ===============
Merger charges 0 63 *
--------------- ---------------
Earnings applicable to common shares
after merger charges 1,516 1,061 43%
=============== ===============
Earnings per common share:
Basic $ 2.60 $ 1.84 41%
Diluted $ 2.47 $ 1.75 41%
Diluted, excluding merger charges $ 2.47 $ 1.85 34%
Diluted, excluding acquisition charges(1) $ 2.53 $ 1.92 32%
Average common shares outstanding:
Basic 583,502,306 575,301,529
Diluted 614,179,415 607,771,801
Return on common equity 22.6% 19.5%
Return on common equity excluding
acquisition charges (1) 23.1% 21.4%
</TABLE>
____________________________________________________
(1) Excludes the effects of expenses associated with the merger of Dean Witter,
Discover & Co. and Morgan Stanley Group Inc. and amortization of goodwill.
F-1
<PAGE>
MORGAN STANLEY DEAN WITTER & CO.
Securities and Asset Management Income Statement Information
(unaudited, dollars in millions)
<TABLE>
<CAPTION>
Quarter Ended Percentage Change From:
------------------------------------------- ---------------------------
May 31, 1998 May 31, 1997 Feb 28, 1998 May 31, 1997 Feb 28, 1998
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Investment banking $ 988 $ 581 $ 800 70% 24%
Principal transactions:
Trading 1,091 722 903 51% 21%
Investments 101 136 72 (26%) 40%
Commissions 602 476 539 26% 12%
Asset management, distribution & admin. fees 741 610 676 21% 10%
Interest and dividends 3,540 2,416 3,150 47% 12%
Other 44 33 53 33% (17%)
------------ ------------ ------------
Total revenues $ 7,107 $ 4,974 $ 6,193 43% 15%
Interest expense 3,303 2,191 2,852 51% 16%
------------ ------------ ------------
Net revenues $ 3,804 $ 2,783 $ 3,341 37% 14%
------------ ------------ ------------
Compensation and benefits 1,870 1,369 1,646 37% 14%
Occupancy and equipment 125 112 122 12% 2%
Brokerage, clearing and exchange fees 127 109 116 17% 9%
Information processing and communications 161 149 147 8% 10%
Marketing and business development 121 100 111 21% 9%
Professional services 132 83 105 59% 26%
Other 132 114 121 16% 9%
------------ ------------ ------------
Total non-interest expenses $ 2,668 $ 2,036 $ 2,368 31% 13%
------------ ------------ ------------
Income before income taxes 1,136 747 973 52% 17%
Income tax expense 449 286 381 57% 18%
------------ ------------ ------------
Net income $ 687 $ 461 $ 592 49% 16%
============ ============ ============
Compensation & benefits as a % of net revenues 49% 49% 49%
Non-compensation expenses as a % of net revenues 21% 24% 22%
Profit margin (1) 18% 17% 18%
<CAPTION>
Six Months Ended Percentage
----------------------------
May 31, 1998 May 31, 1997 Change
------------ ------------- -----------
<S> <C> <C> <C>
Investment banking $ 1,788 $ 1,103 62%
Principal transactions:
Trading 1,994 1,591 25%
Investments 173 192 (10%)
Commissions 1,141 965 18%
Asset management, distribution & admin. fees 1,417 1,197 18%
Interest and dividends 6,690 5,018 33%
Other 97 62 56%
------------ ------------
Total revenues $ 13,300 $ 10,128 31%
Interest expense 6,155 4,617 33%
------------ ------------
Net revenues $ 7,145 $ 5,511 30%
------------ ------------
Compensation and benefits 3,516 2,724 29%
Occupancy and equipment 247 225 10%
Brokerage, clearing and exchange fees 243 204 19%
Information processing and communications 308 291 6%
Marketing and business development 232 196 18%
Professional services 237 158 50%
Other 253 240 5%
------------ ------------
Total non-interest expenses $ 5,036 $ 4,038 25%
------------ ------------
Income before income taxes 2,109 1,473 43%
Income tax expense 830 567 46%
------------ ------------
Net income $ 1,279 $ 906 41%
============ ============
Compensation & benefits as a % of net revenues 49% 49%
Non-compensation expenses as a % net revenues 21% 24%
Profit margin (1) 18% 16%
</TABLE>
_____________________________________
(1) Net income as a % of net revenues.
F-2
<PAGE>
MORGAN STANLEY DEAN WITTER & CO.
Credit and Transaction Services Income Statement Information
(unaudited, dollars in millions)
<TABLE>
<CAPTION>
Quarter Ended Percentage Change From:
----------------------------------------- ---------------------------
May 31, 1998 May 31, 1997 Feb 28, 1998 May 31, 1997 Feb 28, 1998
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Fees:
Merchant and cardmember $ 404 $ 424 $ 428 (5%) (6%)
Servicing 232 186 171 25% 36%
Commissions 9 8 8 13% 13%
Other 3 3 2 -- 50%
------------ ------------ ------------
Total non-interest revenues $ 648 $ 621 $ 609 4% 6%
Interest revenue 673 781 783 (14%) (14%)
Interest expense 251 287 293 (13%) (14%)
------------ ------------ ------------
Net interest income 422 494 490 (15%) (14%)
Provision for consumer loan losses 275 378 405 (27%) (32%)
------------ ------------ ------------
Net credit income 147 116 85 27% 73%
------------ ------------ ------------
Net revenues $ 795 $ 737 $ 694 8% 15%
------------ ------------ ------------
Compensation and benefits 147 136 142 8% 4%
Occupancy and equipment 18 15 18 20% --
Brokerage, clearing and exchange fees 5 4 3 25% 67%
Info processing and communications 114 118 120 (3%) (5%)
Marketing and business development 165 174 183 (5%) (10%)
Professional services 24 16 23 50% 4%
Other 58 64 45 (9%) 29%
------------ ------------ ------------
Total non-interest expenses $ 531 $ 527 $ 534 1% (1%)
------------ ------------ ------------
Income before income taxes 264 210 160 26% 65%
Income tax expense 97 81 61 20% 59%
------------ ------------ ------------
Net income $ 167 $ 129 $ 99 29% 69%
============ ============ ============
Compensation and benefits as a % of
net revenues 18% 18% 20%
Non-compensation expenses as a % of
net revenues 48% 53% 56%
Profit margin (1) 21% 18% 14%
<CAPTION>
Six Months Ended Percentage
--------------------------
May 31, 1998 May 31, 1997 Change
------------ ------------ ------------
<S> <C> <C> <C>
Fees:
Merchant and cardmember $ 832 $ 860 (3%)
Servicing 403 386 4%
Commissions 17 9 89%
Other 5 5 --
------------ ------------
Total non-interest revenues $ 1,257 $ 1,260 --
Interest revenue 1,456 1,548 (6%)
Interest expense 544 570 (5%)
------------ ------------
Net interest income 912 978 (7%)
Provision for consumer loan losses 680 755 (10%)
------------ ------------
Net credit income 232 223 4%
------------ ------------
Net revenues $ 1,489 $ 1,483 --
------------ ------------
Compensation and benefits 289 271 7%
Occupancy and equipment 36 30 20%
Brokerage, clearing and exchange fees 8 4 100%
Info processing and communications 234 246 (5%)
Marketing and business development 348 366 (5%)
Professional services 47 34 38%
Other 103 120 (14%)
------------ ------------
Total non-interest expenses $ 1,065 $ 1,071 (1%)
------------ ------------
Income before income taxes 424 412 3%
Income tax expense 158 157 1%
------------ ------------
Net income $ 266 $ 255 4%
============ ============
Compensation and benefits as a % of
net revenues 19% 18%
Non-compensation expenses as a % of
net revenues 52% 54%
Profit margin (1) 18% 17%
</TABLE>
- ------------------------------------------
(1) Net income as a % of net revenues.
F-3
<PAGE>
MORGAN STANLEY DEAN WITTER & CO.
Credit and Transaction Services Income Statement Information
(unaudited, dollars in millions)
(Managed loan basis)
<TABLE>
<CAPTION>
Quarter Ended Percentage Change From:
----------------------------------------- ---------------------------
May 31, 1998 May 31, 1997 Feb 28, 1998 May 31, 1997 Feb 28, 1998
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Fees:
Merchant and cardmember $ 519 $ 528 $ 533 (2%) (3%)
Servicing 0 0 0 -- --
Commissions 9 8 8 13% 13%
Other 3 4 2 (25%) 50%
------------ ------------ ------------
Total non-interest revenues $ 531 $ 540 $ 543 (2%) (2%)
Interest revenue 1,321 1,299 1,362 2% (3%)
Interest expense 502 491 527 2% (5%)
------------ ------------ ------------
Net interest income 819 808 835 1% (2%)
Provision for consumer loan losses 555 611 684 (9%) (19%)
------------ ------------ ------------
Net credit income 264 197 151 34% 75%
------------ ------------ ------------
Net revenues $ 795 $ 737 $ 694 8% 15%
------------ ------------ ------------
Compensation and benefits 147 136 142 8% 4%
Occupancy and equipment 18 15 18 20% --
Brokerage, clearing and exchange fees 5 4 3 25% 67%
Info processing and communications 114 118 120 (3%) (5%)
Marketing and business development 165 174 183 (5%) (10%)
Professional services 24 16 23 50% 4%
Other 58 64 45 (9%) 29%
------------ ------------ ------------
Total non-interest expenses $ 531 $ 527 $ 534 1% (1%)
------------ ------------ ------------
Income before income taxes 264 210 160 26% 65%
Income tax expense 97 81 61 20% 59%
------------ ------------ ------------
Net income $ 167 $ 129 $ 99 29% 69%
============ ============ ============
Comp & benefits as a % of net revenues 18% 18% 20%
Non-comp exps as a % of net revenues 48% 53% 56%
Profit margin (1) 21% 18% 14%
<CAPTION>
Six Months Ended Percentage
--------------------------
May 31, 1998 May 31, 1997 Change
------------ ------------ ------------
<S> <C> <C> <C>
Fees:
Merchant and cardmember $ 1,052 $ 1,076 (2%)
Servicing 0 0 --
Commissions 17 9 89%
Other 5 5 --
------------ ------------
Total non-interest revenues $ 1,074 $ 1,090 (1%)
Interest revenue 2,683 2,584 4%
Interest expense 1,029 977 5%
------------ ------------
Net interest income 1,654 1,607 3%
Provision for consumer loan losses 1,239 1,214 2%
------------ ------------
Net credit income 415 393 6%
------------ ------------
Net revenues $ 1,489 $ 1,483 --
------------ ------------
Compensation and benefits 289 271 7%
Occupancy and equipment 36 30 20%
Brokerage, clearing and exchange fees 8 4 100%
Info processing and communications 234 246 (5%)
Marketing and business development 348 366 (5%)
Professional services 47 34 38%
Other 103 120 (14%)
------------ ------------
Total non-interest expenses $ 1,065 $ 1,071 (1%)
------------ ------------
Income before income taxes 424 412 3%
Income tax expense 158 157 1%
------------ ------------
Net income $ 266 $ 255 4%
============ ============
Comp & benefits as a % of net revenues 19% 18%
Non-comp exps as a % of net revenues 52% 54%
Profit margin (1) 18% 17%
</TABLE>
______________________________________________
(1) Net income as a % of net revenues.
F-4
<PAGE>
MORGAN STANLEY DEAN WITTER & CO.
Segment and Statistical Data
(unaudited)
<TABLE>
<CAPTION>
Quarter Ended Percentage Change From:
----------------------------------------------------- ----------------------------
May 31, 1998 May 31, 1997 Feb 28, 1998 May 31, 1997 Feb 28 1998
---------------- ---------------- --------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
MSDW
Period end common shares outstanding 587,672,561 586,342,798 605,005,581 -- (3%)
Book value per common share $ 22.15 $ 19.37 $ 22.67 14% (2%)
Shareholder's equity (millions) (1) $ 14,225 $ 12,156 $ 14,524 17% (2%)
Total capital (millions) (2) $ 36,604 $ 33,661 $ 33,535 9% 9%
SECURITIES ($ billions)
Individual Securities
Financial advisors 10,650 9,580 10,397 11% 2%
Client assets $ 425 $ 345 $ 408 23% 4%
Institutional Securities (3)
Mergers and acquisitions announced
transactions (4)
MSDW global market volume $ 195.9 $ 85.6 $ 43.4
Rank 4 3 3
Worldwide equity & related issues (4)
MSDW global market volume $ 15.0 $ 9.7 $ 3.3
Rank 1 2 3
ASSET MANAGEMENT ($ billions)
Assets under mgmt and administration
Products offered primarily to indivs
Mutual funds
Equity $ 73 $ 62 $ 71 18% 3%
Fixed income 52 49 52 6% --
Money markets 33 28 31 18% 6%
---------------- ---------------- ---------------
Total mutual funds 158 139 154 14% 3%
ICS Assets 17 12 16 42% 6%
Other 31 23 31 35% --
Products offered primarily to
institutional clients
Mutual funds 43 41 34 5% 26%
Separate accts, pooled vehicle and
other arrangements 125 88 121 42% 3%
Total assets under management $ 374 $ 303 $ 356 23% 5%
</TABLE>
____________________________________________
(1) Includes preferred and common equity.
(2) Includes preferred equity, capital units and non-current portion of long-
term debt.
(3) Source: Securities Data Corp.
(4) Information is year to date and stated on a calendar year basis.
F-5
<PAGE>
MORGAN STANLEY DEAN WITTER & CO.
Segment and Statistical Data
(unaudited, dollars in millions)
<TABLE>
<CAPTION>
Quarter Ended Percentage Change From
------------------------------------------ ---------------------------
May 31, 1998 May 31, 1997 Feb 28, 1998 May 31, 1997 Feb 28, 1998
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
CREDIT AND TRANSACTION SERVICES
Owned consumer loans
Period end $ 17,913 $ 21,143 $ 20,839 (15%) (14%)
Average 18,293 20,937 21,752 (13%) (16%)
Managed consumer loans (1)
Period end $ 34,091 $ 34,167 $ 35,804 -- (5%)
Average $ 34,479 $ 34,032 $ 36,828 1% (6%)
Interest yield 14.79% 14.85% 14.72% (0.06 pp) 0.07 pp
Interest spread 8.63% 8.72% 8.46% (0.09 pp) 0.17 pp
Net charge-off rate 6.58% 7.07% 7.50% (0.49 pp) (0.92 pp)
Delinquency rate (over 30 days) 7.07% 6.90% 7.40% 0.17 pp (0.33 pp)
General purpose credit card accounts (in millions) 38 40 40
NOVUS Network increase in merchant locations
(in thousands) 101 108 90
<CAPTION>
Six Months Ended Percentage
---------------------------
May 31, 1998 May 31, 1997 Change
------------ ------------ ----------
CREDIT AND TRANSACTION SERVICES <C> <C> <C>
Owned consumer loans
Period end $ 17,913 $ 21,143 (15%)
Average 20,003 21,131 (5%)
Managed consumer loans (1)
Period end $ 34,091 $ 34,167 --
Average $ 35,641 $ 34,277 4%
Interest yield 14.76% 14.85% (0.09 pp)
Interest spread 8.55% 8.73% (0.18 pp)
Net charge-off rate 7.05% 6.98% 0.07 pp
Delinquency rate (over 30 days) 7.07% 6.90% 0.17 pp
General purpose credit card accounts (in millions) 38 40
NOVUS Network increase in merchant locations
(in thousands) 191 201
</TABLE>
____________________________________________________________
(1) Includes owned and securitized consumer loans.
F-6
<PAGE>
EXHIBIT 99.1
Contact: Investor Relations Media Relations
------------------ ---------------
John Andrews Jeanmarie McFadden
212-762-8131 212-762-7842
Timothy Lee
212-392-8709
MORGAN STANLEY DEAN WITTER NET INCOME
UP 45% TO A RECORD $854 MILLION IN SECOND QUARTER
NEW YORK, June 18, 1998 -- Morgan Stanley Dean Witter & Co. (NYSE: MWD) today
reported record net income of $854 million for the second fiscal quarter ended
May 31, 1998 -- up 45 percent from $590 million in last year's second
quarter./1/ Diluted earnings per share were $1.37 -- 46 percent ahead of $.94 a
year ago.
Second quarter net revenues (total revenues less interest expense and the
provision for loan losses) were a record $4,599 million, a 31 percent increase
from a year ago. The annualized return on average common equity for the second
fiscal quarter was 25.0 percent.
Philip J. Purcell, Chairman, and John J. Mack, President, said in a joint
statement, "We had a terrific quarter, particularly in our securities business.
Our other core businesses -- asset management and credit services -- also
reported strong results. This past quarter we sold our Prime Option MasterCard
portfolio and announced agreements to sell our global custody and correspondent
clearing businesses and our interest in SPS Transaction Services. These actions
reflect our strategic decision to focus on our three core businesses. We will
continue to build on our strengths."
Mr. Purcell added, "The increased consolidation activity in our industry during
the past few months underscores the critical need for comprehensive financial
services legislative reform. We are heartened by the recent actions in the U.S.
Senate and House and look forward to final action to modernize the financial
services regulatory structure."
- --------------
/1/ All amounts for the three and six month periods ended May 31, 1997 exclude
merger-related expenses.
<PAGE>
Net income increased to $1,545 million for the first six months of fiscal 1998,
33 percent higher than last year's $1,161 million. Six-month diluted earnings
per share were $2.47, up 34 percent from last year's $1.85. Six-month net
revenues rose 23 percent to $8,634 million.
SECURITIES
The Company's Securities business posted net income of $530 million, a 70
percent increase from the second quarter of 1997. These results reflected strong
performances in both the institutional and individual securities businesses.
. Investment banking had a record quarter, driven by strong revenue increases
from mergers and acquisitions as well as debt and equity underwriting
activity. For the first five months of calendar 1998, the Company ranked
first in equity and equity-related underwritings and maintained a leadership
position in M&A, and high yield and U.S. investment grade debt
underwriting./2/
. Institutional sales and trading results were also strong, with a record
quarter in equities and excellent performances in fixed income, foreign
exchange and commodities. Non-U.S. regional performance contributed
significantly to second quarter results with record activity in Europe, and a
solid contribution from Japan and Asia, despite unsettled market conditions.
. Individual securities revenues climbed to a record high, primarily due to
higher equity and mutual fund commissions and other revenues from the
distribution of asset management products.
. The number of financial advisors in the Company's individual securities
business, which includes Private Client Services (PCS), rose to 10,650 -- an
increase of 253 for the quarter and 1,070 over the last twelve months. Total
client assets rose by $17 billion for the quarter and $80 billion from a year
ago to a record $425 billion.
- --------------
/2/ Source: Securities Data Corp. - Jan 1 to May 31, 1998.
<PAGE>
ASSET MANAGEMENT
Asset Management's second quarter net income of $157 million was 5 percent ahead
of a year ago. These solid results reflected continued growth in assets under
management.
. The Company had $374 billion of assets under management and supervision at
the end of the second quarter, an increase of $71 billion, or 23 percent,
over a year ago.
. Retail assets increased by $5 billion for the quarter and $32 billion from a
year ago -- to stand at $206 billion. Institutional assets rose to $168
billion-- an increase of $13 billion for the quarter and $39 billion over the
last twelve months.
. The Private Equity Group (formerly known as Merchant Banking) recognized
second quarter investment gains of $100 million compared with $129 million a
year ago. This year's second quarter results include a gain on the sale of
its investment in CAT Ltd.
CREDIT AND TRANSACTION SERVICES
Credit and Transaction Services reported net income of $167 million, up 29
percent from last year. The improved operating results primarily reflect the
sale this quarter of the Prime Option portfolio.
. Managed loans of $34.1 billion, after the sale of the Prime Option portfolio,
were essentially unchanged from the end of the second quarter of 1997.
. The consumer loan charge-off rate declined to 6.58 percent in the second
quarter of 1998 from 7.07 percent a year ago. The decline in the charge-off
rate was primarily attributable to the portfolio sale.
. New merchants enrolled by the NOVUS Network during the quarter included
Nordstrom and the Hard Rock Cafe.
. Discover Brokerage Direct, the Company's on-line broker, continued to grow
its account base and transaction volume.
<PAGE>
Total capital (stockholders' equity and long-term debt) at May 31, 1998 was
$36.6 billion, including $14.2 billion of common and preferred stockholders'
equity. Book value per common share was $22.15, based on quarter-end shares
outstanding of 587,672,561.
The Company has repurchased approximately 21.0 million shares of its common
stock since the February 1998 announcement of its $3 billion stock repurchase
authorization.
Morgan Stanley Dean Witter & Co. is a global financial services firm and a
market leader in securities, asset management, and credit and transaction
services. The Company has offices in New York, London, Tokyo, Hong Kong, and
other principal financial centers around the world and has 411 securities branch
offices throughout the United States.
# # #
(See Attached Schedules)
This release may contain forward-looking statements. These statements, which
reflect management's beliefs and expectations, are subject to risks and
uncertainties that may cause actual results to differ materially. For a
discussion of the risks and uncertainties that may affect the Company's future
results, please see "Management's Discussion and Analysis of Financial Condition
and Results of Operations" in the Company's 1997 Annual Report to Shareholders
and the Company's Quarterly Report on Form 10-Q for fiscal 1998.
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